In an election year dominated by socioeconomic themes, it seems logical that raising the federal minimum wage would become a heated campaign issue in the battle for the presidency. Stagnating wages and the increasing concentration of wealth among the nation’s highest earners have prompted calls to boost the purchasing power of American workers. At $7.25 an hour, a full-time federal minimum-wage earner makes about $15,080 a year, which is below the federal poverty level for a two-person family.
But neither President Barack Obama nor Republican presidential candidate Mitt Romney has said much about the minimum wage, though Obama once called for raising it to $9.50 an hour by the end of 2011 and Romney supported indexing it for inflation earlier this year until conservatives cried foul.
In the absence of a prominent push to boost the federal minimum wage, states and local governments have picked up the slack: Eighteen states and the District of Columbia now have minimum wage rates that are higher than the federal level.
In January, eight of those states – Arizona, Colorado, Florida, Montana, Ohio, Oregon, Washington and Vermont – raised their hourly minimum wages by 28 to 37 cents. Last month, Rhode Island bumped its minimum wage from $7.40 an hour to $7.75, to take effect next year.
In Massachusetts, which passed the first state minimum-wage law 100 years ago, lawmakers are weighing whether to raise the wage to $10 an hour next year. Voters in Missouri will decide in November whether to hike their minimum wage.
Santa Fe, N.M., and San Francisco boast the nation’s highest minimum wage rates, at $10.29 and $10.24 per hour, respectively. San Jose, Calif., voters might lift their city’s floor wage from $8 to $10 an hour in November, and volunteers in Albuquerque, N.M., are collecting signatures for a ballot initiative that would raise their city’s minimum wage to $8.50 an hour.
Though it typically enjoys strong public support, raising the minimum wage is always contentious.
Some economists say increases spur more consumer spending, which helps the economy and ultimately creates jobs. Others say the rate increases hurt job creation during economic downturns and put a drag on hiring when the economy is strong.
As the three-year anniversary of the last federal minimum-wage hike arrives July 24, a coalition of labor, religious and women’s groups is preparing to fight for an increase once again. The activist groups are launching a nationwide campaign to raise the federal minimum wage, starting with a national “Day of Action” on Tuesday.
Marches and rallies are planned Tuesday at congressional district offices and at businesses that pay low wages. In Chicago, protesters will hold a trolley tour of low-wage employers, while activists in Pittsburgh will rally for higher wages outside City Hall. Similar events are planned in dozens of cities, including New York, Washington, Miami, Kansas City, Mo., Sacramento, Calif., and Philadelphia.
Democrats in Congress also are weighing in. Rep. George Miller, D-Calif., soon will introduce legislation to raise the federal minimum wage by 85 cents an hour for three straight years – taking it from $7.25 to $9.80 per hour – and then index it annually for inflation thereafter. Sen. Tom Harkin, D-Iowa, and Rep. Jesse Jackson Jr., D-Ill., already have introduced similar bills. The proposals would provide raises for about 28 million people, according to estimates by the nonprofit Economic Policy Institute.
The Republican-led House of Representatives isn’t likely to pass such a proposal, but the Democratic-controlled Senate might. Democrats surely welcome the chance to portray the GOP as insensitive to the needs of working Americans.
“It’s a classic election-year ploy to make the Democrats look like they’re protecting low-income workers. I think it’s well understood that raising the minimum wage hurts workers on the lower end of the pay scale in that it does kill jobs,” said a recent statement from Randy Johnson, the senior vice president for labor, immigration and employee benefits at the U.S. Chamber of Commerce.
Boosting the minimum wage would improve the living standards for millions of people, such as LaTrisha Gandy of St. Louis, who typically spends most of everything she earns.
Gandy, 29, lost her job as a restaurant cook when the employer folded several weeks ago. Her $7.50-an-hour pay was only 25 cents more than the Missouri hourly minimum wage. After taxes, the 29-year-old mother of three took home about $370 every other week. With those earnings, she qualified for $385 in food stamps each month.
After rent, car payment, utilities and other bills, Gandy said, there’s little left for nonessentials.
“It’s very difficult making ends meet on that salary, because you have to pay a little here and a little there, and then two weeks later you have to do the same thing again. So you never have extra to do anything, except to pay bills,” she said.
In a nation that prides itself on opportunity for all, those at the bottom of the economic ladder have only a 4 percent chance of moving to the very top, according to a new study by the Pew Charitable Trusts. A big part of the upward mobility problem is increased income inequality, which stems partly from the eroding real value of the minimum wage, economists say.
In today’s dollars, the inflation-adjusted value of the minimum wage in 1979 was $8.51 an hour, according to researchers at the Center for Economic and Policy Research.
“As a single parent, it’s not easy supporting a household off the minimum wage, especially with gas going up. Food is going up. The schools can’t afford things anymore, so they expect the parents to buy more supplies for the school. They really need to sit down and look at that,” Gandy said.
At her family’s Colony House restaurant in New Haven, Mo., Kathie Zuroweste employs nine people, several of whom earn the minimum wage. Most of her workers are high school students, and some are the children of former employees. Zuroweste said her workers were like family. But she said raising the minimum wage would create a “vicious circle” that required boosting the pay of longtime employees when newer ones came in at higher wages.
“The government is pitting us against our own people,” Zuroweste said of a potential minimum-wage hike. “This is our family, and the government needs to stay the heck out of what we’re doing as a business. It’s none of their business what the owner and employee agree on as far as a wage. If the potential employee is not going to be satisfied with (their wage offer) they don’t have to come on.”
Some of Zuroweste’s employees earn $3.63 an hour, Missouri’s minimum wage for tipped workers. More than 150,000 Americans – many of them restaurant, hotel, carwash and nail salon employees – are paid mainly in customers’ tips and therefore make less than the standard minimum wage.
The federal tipped minimum wage is $2.13 an hour, but most states and the District of Columbia have raised their tipped minimum wages above that. In at least 14 states, however, that floor wage hasn’t been increased since 1992. Even so, most tipped workers earn several dollars more per hour than the minimum wage when their tips are included. If tips alone don’t bring their earnings to the minimum wage level, employers, by law, must make up the difference.
But 19-year-old Ian Scott of Spring, Texas, said that was a hit-or-miss proposition. He earns $2.13 an hour as a part-time attendant at the drive-up, carryout window of a family chain restaurant just north of Houston.
“There’s been plenty of nights where I walked away with maybe 15 bucks (in tips), and I’ve never seen anything that looks like (the standard) minimum wage on my paycheck,” Scott said, except when he’s paid for attending meetings or works a different position.
He said most customers didn’t even realize they were supposed to tip him, so his earnings vary from $30 a week without tips to $100 with tips.
“I should be making at least $300” every two weeks, he added. “Every time I get a zero in the tip section (of a sales receipt), every night I leave with less than $50, I think, ‘This is not worth it.’ ”